At midday: TSX slips as financial stocks weigh

Canada’s main index slipped on Wednesday, weighed down by the heavyweight financial sector.

The financial sector slipped 0.5 per cent as shares of Royal Bank of Canada, Toronto-Dominion Bank and Bank of Montreal fell between 0.3 and 0.6 per cent.

At 11:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 35.86 points, or 0.22 per cent, at 16,058.39.

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Eight of the index’s 11 major sectors were lower.

Canada is ready to offer the United States limited access to the Canadian dairy market as a concession in negotiations to rework the North American Free Trade Agreement, two Canadian sources said on Tuesday.

The Canadian dollar edged higher against its U.S. counterpart on Tuesday as oil prices jumped and investors grew more optimistic of a deal to renew the NAFTA trade pact.

The energy sector climbed 0.4 per cent as crude oil prices gained after a drop in U.S. crude inventories and as the prospect of the loss of Iranian supply added to concerns over the delicate balance between consumption and production.

The largest percentage gainers on the TSX were shares of New Gold Inc, which jumped 16.5 percent after the company named a new chief executive officer.

Shares of Bausch Health Companies jumped over 22.3 per cent. The company’s shares rose after it resolved intellectual property litigation related to its bowel disorder drug, Xifaxan, with Actavis Laboratories.

An index of global stocks rose on Wednesday, helped by a report that Washington is proposing a new round of trade talks with Beijing and resurgent oil prices pumping up energy names.

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MSCI’s gauge of stocks across the globe gained 0.34 per cent with Wall Street higher after limping through its opening trades and the pan-European Stoxx 600 up 0.44 percent.

The U.S. is proposing new talks with China aimed at getting bilateral economic negotiations back on track, the Wall Street Journal reported, citing unidentified people briefed on the matter.

Energy, meanwhile, was a top-performing sector in both Europe and the United States indexes after U.S. crude inventories dropped and the bite of U.S. sanctions on Iran threatened to limit supply.

U.S. crude rose 2.35 per cent to $70.88 per barrel and Brent was last at $79.77, up 0.9 per cent on the day.

The Dow Jones Industrial Average rose 156.55 points, or 0.6 per cent, to 26,127.61, the S&P 500 gained 5.48 points, or 0.19 per cent, to 2,893.37 and the Nasdaq Composite dropped 21.36 points, or 0.27 per cent, to 7,951.11.

The market’s mood music had been somber after a weak trading session in Asia, where bourses in Shanghai, Hong Kong and Tokyo all closed lower.

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President Donald Trump said on Tuesday the United States was taking a tough stance with China. That cemented expectations that new levies on Chinese exports will soon be announced.

New negotiations would give markets hope after a months-long escalation in tensions between the world’s two biggest economies.

“What the market needs is a signal of some relaxation in trade rhetoric, a bit of climbdown,” said Salman Ahmed, chief investment strategist at Lombard Odier. “That should be enough as (economic) fundamentals are strong. But you do need a trigger point and so far we have not seen it.”

MSCI’s broad emerging markets index touched a near-16-month low before rebounding a bit to rise 0.33 per cent for the day.

Hard-hit emerging markets currencies were 0.47 per cent stronger, helped by the weaker greenback. The U.S. dollar index fell 0.45 per cent as hopes also grew of concessions by Canada that would resolve disputes over reworking the North American Free Trade Agreement.

Ahmed said another positive catalyst for markets could be signals from the U.S. Federal Reserve that it could slow the pace of interest rate rises. But given the torrent of strong U.S. data, that looks unlikely - data this week showed U.S. small business optimism at the highest level on record.

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“In 2015 when emerging markets got into a lot of trouble the Fed recognised the international spillover effect. This time that has not happened,” he added.

Markets will also keep an eye on U.S. bonds, especially given the steady march higher in shorter-term Treasuries heavily influenced by expectations of Fed policy.

The yield on the 2-year note hit a decade peak of 2.752 per cent on Tuesday when data showed sustained strength in the jobs market and the Treasury started a record debt sale amounting to almost $150-billion. It eased to 2.744 per cent on Wednesday on weaker-than expected producer price data.

Political risk meanwhile returned to the radar of investors in Italy. Italian bond yields, which fell to six-week lows in recent days, rose after local media reported 5-Star, one of the parties in the ruling coalition, was demanding 10 billion euros in the budget to implement plans for a basic universal income.